The Central Government has entered into an agreement with the Reserve Bank of India by
virtue of which the general banking business of the Government (in which business is
included the receipt, collection, payment and remittance of moneys on behalf of the
Government) is carried on and transacted by the Reserve Bank in accordance with and
subject to the provisions of the agreement and of the Reserve Bank of India Act, 1934, and
also in accordance with and subject to such orders as may, from time to time be given to the
Reserve Bank by the Central Government
Account of the Central Government with the Bank
(1) Ministries and Departments of the Central Government shall, as a rule, operate on such
offices and branches of the Reserve Bank and or of the bank, as have been, or may be
nominated for handling the receipt and payment transactions of the particular Ministry or
Department.
(2) Each office or branch of the Reserve Bank or bank handling transactions of the
Ministries, Departments of the Central Government shall maintain separate accounts in
respect of each Ministry and Department banking with it and render an account of the
transactions to the Pay and Accounts Officer of the concerned Ministry and, or Department, at
such intervals as may be prescribed by the Government, together with all the supporting
challans, paid cheques. These transactions shall also be routed through the banking channel
prescribed by the Reserve Bank of India, to facilitate their incorporation in the books of the
Reserve Bank of India, Central Accounts Section, at Nagpur which is responsible for keeping
a complete account, of receipt and payments (including inter-Governmental adjustments and
adjustments inter se of Defence, Railways and Posts—other than Telecommunications) on
account of the Central Government.
(3) The transactions of Railways, Posts, Telecommunications and Defence Department
arising at offices and branches of the Reserve Bank and State Bank of India, acting as agent
of the Reserve Bank shall be distinguished from other Central transactions in the initial
accounts and classified separately for each Railways, each circle of Posts, each Accounts
Officer of Telecommunication, and each Controller of Defence Accounts respectively. These
transactions will be taken against the Railway Fund, Postal Account, Telecommunication
Account and Defence Account respectively, in the books of the Reserve Bank. Each office
and branch of the Reserve Bank entrusted with the work shall furnish to Accounts Officer
concerned of the Railways, Postal, Telecommunications and Defence Department, as the
case may be, daily scrolls relating to the transactions pertaining to each, together with the
requisite challans, paid cheques.
(i) Central Government Account Balance (in respect of Union Territory Administrations
dealt with by Accountants General and of all Union Territory Governments with
Legislature).
(ii) Railway Fund Balance
(iii) Postal Account Balance
(iv) Telecommunication Account Balance
(v) Defence Account Balance
(vi) Departmentalised Ministries’ Account Balance (which also includes transactions of
Union Territories of Delhi and Andaman and Nicobar Islands whose accounts have been
separated)
(vii) Total
The Central Accounts Section of Reserve Bank shall maintain individual accounts of various
Central Government Ministries, Departments and of Union Territory Administrations having
separated accounts offices, and send a monthly statement to their Principal Accounts Offices
with such supporting details as may be prescribed by the Reserve Bank in consultation with
the Controller General of Accounts; in respect of (i) above to the concerned Accountants
General (with break up of balances/transactions relating to Central Government and relating
to relevant Union Territory Administrations) and Accounts Offices of Union Territory
Governments; and in respect of (ii), (iii), (iv), (v) above, to the Railway Board, Postal Board,
Telecommunications Board and Controller General of Defence Accounts respectively.
Accounts of State Governments with the bank
Each State Government has made a separate agreement with the Reserve Bank of India by
virtue of which the general banking business of that Government (in which business is
included, the receipt, collection, payment and remittance of moneys on behalf of that
Government) is carried on and transacted by the Reserve Bank, in accordance with and
subject to the provisions of the agreement and of the Reserve Bank of India Act, 1934, and in
accordance with and subject to such orders as may from time to time be given to the Reserve
Bank by the State Government. The operations of each State shall, however, be confined to
the offices and branches of the Reserve Bank of India and of the bank which have been
designated as falling within the area of that particular State. The receipt and payment of
moneys on behalf of a State outside its jurisdiction shall ordinarily be arranged through the
Accountant General of the State in which the transactions take place.
Each office or branch of the Reserve Bank, or the State Bank of India acting as agent
of the Reserve Bank, shall keep a separate account of cash transactions undertaken by it on
behalf of the State Government within whose area it is situated. All transactions which cannot
be debited or credited directly to the account of the Central Government with the Bank and
transactions of other State Governments shall also be taken to the account of the
Government of the State in which they occur. Statement of these transactions together with
all supporting vouchers, challans, paid cheques etc. shall be forwarded by each office and
branch of the Bank daily to the local Treasury Officer or to the Accountant General as the
case may be. The transactions shall also be reported to Central Accounts Section, Reserve
Bank of India, Nagpur.
Complete accounts of the Central Government and of each of the State Government
with the Bank shall be maintained by the Central Accounts Section of the Reserve Bank at
Nagpur which shall also act as a general clearing house for the adjustment of (i) all
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transactions between different State Governments and (ii) such transactions between the
Central and State Governments as may be specified by the Central Government. All
adjustments to be made between the accounts of different State Governments as well as all
payments which one of these Governments has to make to another shall be advised by the
Accountant General authorised in this behalf to the Central Accounts Section of the Reserve
Bank which will pass the necessary entries in the accounts of the Governments concerned,
maintained in its books. Similarly, such adjustments in the case of specified transactions
between the Central Government and the State Governments as well as transactions
between Defence, Posts, Telecommunications and Railways inter se will be advised to the
Central Accounts Section of the Reserve Bank by the Accountant General authorised in this
behalf for making monetary settlement in the accounts of the Government concerned
maintained in the books of the Bank. However, the advices to be sent by the Accountant
General to the Central Accounts Section, Reserve Bank of India, Nagpur debiting to Central
Government balances shall be supported by a certificate to the effect that “this advice
represents withdrawal of an earlier erroneous credit to the Central Government and does not
represent withdrawal of payments already made which were due to the Central Government
and that necessary details are being furnished to the Principal Accounts Officer of the Central
Government concerned.” Details of transfers affected in its books against the balance of the
State Government or of the Central Government (and between accounts of Defence, Posts,
Telecommunications and Railways inter se) as the case may be, on account of adjustments
advised by Accounts Officers authorised for the purpose, shall be communicated by the
Central Accounts Section of the Bank to the originating as well as to the effected Accounts
Officers or Accounts Officer of the concerned Ministry/ Department of the Central Government
at the close of each day. At the close of the accounts of each month, a statement of closing
balance of each State Government in the books of the Bank after taking into accounts all cash
transactions in all the offices, branches and agencies of the Bank and the adjusting
transactions in its own books shall be forwarded by the Central Accounts Section to the
Accounts Officer concerned.
Similarly, a statement of the closing balance of the Central Government comprising:-
(i) Central Government Account Balance (in respect of Central transactions of Accounts
Officers and separated accounts of Union Territories only).
(ii) Railway Fund Balance.
(iii) Postal Account Balance.
(iv) Telecommunication Account Balance.
(v) Defence Account Balance.
(vi) Departmentalised Ministries Account Balance
(vii) Total
shall be sent to the Controller General of Accounts. Besides, the Central Accounts Section of
Reserve Bank of India shall maintain individual accounts of all the Central Government
Ministries /Departments as well as accounts of Railways Fund, Posts, Telecommunications
and Defence and send a monthly statement to the Controllers of Accounts, Railway Board,
Postal Board, Telecommunications Commission and Controller General of Defence Accounts.
To keep the transactions under departmantalised system distinct from other Central
transactions, the Central Accounts Section of Reserve Bank of India shall maintain a separate
proforma account styled “Departmentalised Ministries Account”.
State Transactions in Central Treasuries
Cash balances held in the treasuries of the Central Government form part of the
Consolidated Fund, Contingency Fund and the Public Account of India. Such treasuries exist
in those Union Territories whose accounts have not been separated from audit and continue
to be compiled by the Comptroller and Auditor General of India. Transactions on behalf of
State Governments arising in these treasuries shall be classified in the treasury accounts
under the head ”8658 – Suspense Accounts – Suspense Accounts (Civil) – Accounts with
Accountant General and settled in cash by exchange of cheques/demand drafts as the case
may be.
Transactions of the other Governments, including Central Government in
State Treasuries
- Cash balances held in a State Treasury form part of the Consolidated Fund, the
Contingency Fund (if one has been established) and the Public Account of the State to which the Treasury belongs. The treasury Rules of each State Government issued under article 283 of the Constitution, however, provide that moneys may be received and payments made on behalf of other State Governments, by a State Treasury. Similarly, moneys may be received and payments made by such treasuries on behalf of the Central Government in the case of certain specified transactions. All such receipts and payments on behalf of other State
Governments and the Central Government vide (b) infra shall be taken in the first instance against the cash balance of the State concerned. On receipt of intimation of such transactions through the monthly treasury account or otherwise the Accountant General shall take the following action:-
(a) In the case of transactions pertaining to the other State Governments, the Accountant
General shall make the requisite adjustments through the Central Accounts Section of the
Reserve Bank against the balances of the other State Governments concerned
(b) In the case of such transactions of the Central Government, including Railways / Postal
/ Defence Departments at State treasuries (both banking and non-banking), these shall be
accounted for by the treasuries in the State Section of Treasury Account under the head ‘PAO
Suspense – Transactions adjustable by PAO Ministry / Department of ……………’ below the
Major head ‘8658 – Suspense Accounts’ for necessary cash settlement by the State
Accountant General with the Pay and Accounts Office
Course Purchase Query 